£13,000 Loans for Bad Credit

Updated: April 21, 2024 Author:

Key Takeaways: Having a bad credit history is a handicap limiting your borrowing options. In the subprime finance market, there are lenders willing to approve £13,000 loans (and higher), provided that you can afford the monthly repayments. Interest rates will be higher, and the repayment periods shorter. Guarantor loans are the most accessible with the most affordable being through Credit Union loans.

What Lenders Can Approve £13,000 Loans to People with Bad Credit?

Several Credit Unions provide high-value loans with repayment periods of up to 10 years, sometimes longer. With bad credit, a guarantor may be required. A few companies on our list of bad credit loan direct lenders can provide £13,000. ‘Everyday Loans’ can lend up to £15,000 and ‘Evolution Money’ can lend from £5,000 to £100,000 on secured homeowner loans. If you’re a homeowner, another company in the same finance group is ‘Progressive Money’ which can lend up to £15,000 as an unsecured personal loan, but it is limited to homeowners only.

Bad Credit Lenders Focus on Creditworthiness Over Credit Scores

In the subprime finance market, lenders focus primarily on your current creditworthiness and affordability. Some will accept income from benefits as a top-up to your monthly income, others only take your earnings from employment as evidence of affordability. Each lender specifies the eligibility criteria they are willing to consider. Some will consider applications from people who have CCJs on their credit file, provided it has aged, such as being issued over 3 years ago.

An important consideration is the age of records on your credit report. Entries stay on your credit report for 6 years from the date of issue. After six years, they get dropped from credit reports. Outstanding debts don’t disappear, but the negative entry that was causing your credit score to drop becomes invisible to lenders. When applying for finance, check the eligibility for each lender before applying because some will consider approving a loan of £13,000 even if you have a discharged bankruptcy, which happens 1 year from the issuing date. Undischarged bankruptcies put severe restrictions on your ability to secure finance within 12 months from the date of issue.

Guarantor Loans

When you have bad credit, having a co-signer can help you get a loan approved. Guarantor loans for £13,000 can require that the guarantor has a good credit score, or be a homeowner. The benefit the lender is looking for is to know that they have the means to be repaid if the initial applicant can’t keep up the repayments. They want the security from the guarantor and it will help to use someone who is a homeowner.

With a guarantor loan, lenders typically pay the loan amount into the bank account of the guarantor, ensuring they know how much has been borrowed, and it’s then the guarantor who would transfer the loan to your account, or you could come to an amicable agreement to use the funds to pay for things of necessity, letting the guarantor have some say into how the money is spent. As an example, asking a parent to co-sign a guarantor loan for home improvements, they could help negotiate with contractors, partially pay for materials and labour, releasing full payment only after all the work is done satisfactorily, avoiding hassles of going over budget due to incompetent workmanship that someone with more experience may be able to spot.

Joint Loans

Joint loans differ from guarantor loans in that both people signing the agreement are jointly liable for the repayments from the outset. Both guarantor loans and joint loans create a financial association on credit reports, however, the advantage to a joint loan application – in particular for higher value loan amounts – is that two incomes are used for affordability assessments. If your current salary was below the income threshold a lender requires, having a joint applicant can help push the income up, making it possible to meet the affordability criteria set by the lender.

Factors to Consider about Secured Loans for £13,000

With bad credit, loans for £13,000 are high value and most will require some form of security. Secured loans can be secured on a vehicle, such as a motorhome or a caravan. Logbook loans tend to let you borrow up to half the value of the asset so for a £13,000 loan, you’d need a vehicle valued at £26,000 or more. Interest rates tend to be higher than homeowner loans. For homeowner loans, several types of loans can be secured on the property.

Types of Homeowner Secured Loans

Second Charge Mortgages

When you have a mortgage on your property, that’s by default, a first charge loan secured against the property. When you sell, or the lender takes possession because you defaulted on the mortgage payments too many times, the mortgage gets repaid from the proceeds of the sale first, then you get to the keep the remainder. The amount you own in the property is the equity. Second charge mortgages are based on the equity you own. Not solely the market value of the home. As an example, if you have a property valued at £200,000 with an outstanding mortgage of £150,000, you’d own £50,000 equity. Using a second charge mortgage, the £13,000 loan would be secured against the equity you own in the property, placing a second charge on the Title Deeds. Upon selling the property, the first charge (mortgage) gets repaid, and then from the remaining money, the second charge loan gets repaid.

Bridging Loans

This type of finance is available through specialist lenders and, as the name implies, it’s used to bridge a gap. It could be that you’re downsizing and need to raise a deposit for a new home. With bad credit, lenders typically want a higher deposit, capping the LTV (Loan to Value) to around 75% or less. Loans secured against your home, which means it’s your sole residence, are regulated bridging loans with the maximum repayment terms being 12 months. Unregulated bridging loans are for property investors and can be secured against a second home with repayment terms being around 18 months when you have a bad credit history. With good credit, repayment terms can be longer, typically 2 years. These are high cost loans, with interest rates quoted as monthly, but when averaged over the year, work out to over 20% APR.